Wednesday, January 30, 2013

The book Metaphors
We Live By makes a compelling case that metaphors are much more than mere
linguistic artifacts or literary flourishes: they are conceptual devices
through which we structure our understanding of the world around us. They
permit us to relate fuzzier concepts which cannot be sharply defined (things
such as love and peace) in terms of physical notions which we can experience more
directly through our senses.

We thought we’d try their logic on the
concept of money. Specifically: what does how we talk about money tell us about
how we conceive it?

In the first instance we tend to look at money
as a resource, and as such it can be earned, spent, set aside, used. We can
even make it. We think of the money
resource in very physical terms. It is measurable because it can have mass (as
in he has a ton of money), volume (buckets of money), or extension (raising or putting up money). It is appreciable through our full sensory range:
he touches money daily, he reeks of wealth, show me the money, money
talks. Wrote F. Scott Fitzgerald of his female protagonist in The Great Gatsby, “Her voice is full of
money (...) – that was the inexhaustible charm that rose and fell in it, the
jingle of it.” Because of its importance in daily life, the money resource is
often analogized in terms of basic foodstuffs, as in dough or bacon. Who said money is no object?

Conceptualizing money as a resource
emphasizes the quantity of money. But sometimes we need to think of money in
more probabilistic terms, in which case the money as a container
metaphor seems more appropriate. Your bet may be in the money when it is likely to go into your container: it’s
potential money. You’re out a dollar
when you lose it or waste it.

But the more interesting metaphors relate
to money as a substance, where it’s the condition of the substance
rather than its quantity that matters. We can associate money with temperature:
readily-available cash burns a hole in
your pocket. In international finance, speculative, short-term capital
flows are hot money. In West African
community finance, l’argent chaud (hot
money) are funds constituted from clients’ resources, while l’argent froid (cold money) is pumped in
as credit from the government or a bank. Hot money is closer to the heart, and thus
hot money loans are always the first to be repaid.

We also think of money in terms of the
states of matter. We like to think of our monetary wealth as being solid: we freeze money, we name our currencies after weights (pounds in the UK, pesos in Latin America), we think of people as being loaded. Easily available or spendable
money we tend to see as being liquid:
we speak of regular cash flows, of pouring or hemorrhaging money, of pooling
it into a slush fund. If you manage
your money well you will stay afloat,
you will remain solvent, and you can
avoid going under and having to be bailed out. The act of spending money is
akin to vaporizing it: your account dries
up, you burn money.

Money can also have a tempo. Dubious
traders can be out to make a fast buck,
while economists will tell you that more readily convertible forms of money
have higher velocity.

Isn’t it remarkable how consistent the
metaphors of money are with elementary physics. The temperature of a substance,
its physical state and the speed of motion of its particles are all
manifestations of the same thing: the amount of energy embedded in the
substance. Long-term or ‘locked-up’ savings we think of as low-energy (cold,
slow, solid) whereas ‘available’ money is higher energy (hot, fast, liquid).

Could this implicit
notion of energy refer to the psychological effort we need to expend daily to
maintain the money, i.e. to not spend it? The process of freezing or slowing
down money is about getting it out of our mind (and our grip) as much as we
can.

Ignacio Mas is an independent consultant on mobile money and technology-enabled models for financial inclusion. His website can be found here.

Kim Wilson is on the faculty of the Fletcher School of Law and Diplomacy at Tufts University and blogs at Savings Revolution.